Iran’s Khamenei Says US Nuclear Talks Unlikely to Yield Results

Political

Summary:

Iranian Supreme Leader Ayatollah Ali Khamenei said he doesn’t think negotiations with the US over his country’s nuclear program will succeed and urged the Trump administration to stop “talking nonsense.”

Referring to the fact that talks with the US hadn’t succeeded under former President Ebrahim Raisi, Khamenei said “there were indirect negotiations during his time as well, just like now, but they were without result. We also don’t think they’ll lead to a result now. We don’t know what will happen.”

Benchmark Brent oil rose as the comments threw fresh uncertainty on the prospect of Washington and Tehran reaching a deal to lift sanctions on Iran’s oil exports and broader economy in exchange for caps on its atomic activity.

Khamenei, who’s the ultimate decision maker in the Islamic Republic, said it was “outrageous” that the US has demanded that Iran dismantle its uranium-enrichment program.

“No one is waiting for this or that party’s permission. The Islamic Republic has its own policies, its own approach, and it follows its own path,” he said in comments on Iranian state TV.

Source: Bloomberg Europe

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Russia-Ukraine Conflict

Trump Steps into Peace Mediation with Bold Ceasefire Claim

Former President Donald Trump declared that Russia and Ukraine would begin negotiations for a ceasefire “immediately” following a phone call with President Vladimir Putin. Trump, who subsequently briefed Ukrainian President Volodymyr Zelenskiy and key European leaders, emphasized potential progress toward ending the war. Yet, the Kremlin's statements struck a more cautious tone, noting that talks would be gradual and without deadlines.

Putin acknowledged the resumption of dialogue with Ukraine and expressed willingness to work on a memorandum defining principles for a possible peace accord. While Trump painted the talks as a breakthrough, Putin’s response merely suggested they were “on the right track”—highlighting a discrepancy in both narrative and urgency.

Differing Strategic Approaches Between Washington and Europe

Despite Trump's optimistic framing, his hesitation to impose new sanctions drew concern from European leaders. While German Chancellor Friedrich Merz announced increased sanctions on Russia after the call, Trump defended his softer approach by arguing that pressure tactics might derail peace efforts. He stated bluntly, “This is not my war,” signaling that his involvement could remain conditional.

This divergence reflects more than tactical differences; it reveals a growing strategic disconnect. European leaders, aiming to corner Moscow economically, are frustrated by Washington’s perceived passivity. Ursula von der Leyen diplomatically described the conversation with Trump as “good,” but internal reports suggest EU leaders were “shocked” at Trump’s leniency.

Memorandum Discussions Begin, But Peace Remains Distant

Both Moscow and Kyiv have agreed to draft a memorandum outlining the foundations for peace. Kremlin officials confirmed that negotiations are set to begin, but emphasized the complexity of reaching a unified document. Kremlin spokesperson Dmitry Peskov noted the absence of any deadlines, adding that “the devil is in the details.”

Trump had initially sought a 30-day ceasefire commitment, but Putin rejected the imposition of timeframes, reiterating that specific conditions must be met before hostilities can end. His insistence on Ukrainian troop withdrawals from four occupied regions remains a core obstacle.

Moreover, the Trump-Putin discussion also touched on a potential prisoner swap—nine Russians for nine Americans—showcasing a dual-track negotiation approach covering both battlefield and diplomatic fronts.

Kyiv Seeks Broader Diplomatic Framework

President Zelenskiy responded to Trump’s outreach by calling for a high-level international summit involving Ukraine, Russia, the U.S., EU countries, and the UK. He proposed that such talks could be hosted by Turkey, Switzerland, or the Vatican. Trump mentioned Pope Leo had shown interest in hosting the negotiations, but no formal arrangements have been confirmed.

Zelenskiy reiterated Kyiv’s willingness to participate in direct negotiations “in any format that brings results,” signaling flexibility despite skepticism about Moscow’s sincerity. The lack of clarity about whether this broader meeting is part of Trump’s proposed process leaves key diplomatic architecture undefined.

Putin’s Strategic Positioning Amid Ongoing Offensives

Despite participating in talks, Russia continues its military operations. Putin currently holds control over one-fifth of Ukraine and shows no sign of yielding ground. Analysts such as former Swedish PM Carl Bildt warned that the Kremlin is leveraging negotiations to deflect pressure while maintaining its battlefield advantage. This dual strategy enables Moscow to extract concessions without halting its advance.

Putin emphasized that the coming memorandum would not only set out potential timelines for peace but also focus on “eliminating the root causes” of the war. This framing suggests that Moscow seeks a structural settlement on its terms, rather than immediate de-escalation.

While Trump’s announcement of ceasefire talks has injected momentum into stalled diplomatic efforts, the lack of a clear framework, differing strategic interests, and Russia’s continued offensives all point to a complex road ahead. Without binding commitments or timelines, and with Trump’s reluctance to apply pressure on Moscow, the initiative risks becoming more symbolic than substantive. The coming weeks will test whether this opening leads to durable negotiations or merely prolongs the status quo under the guise of dialogue.

Source: Reuters

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Economic

Australia Responds to Global Headwinds with Rate Cut

On May 20, 2025, the Reserve Bank of Australia (RBA) lowered its main cash rate by 25 basis points to 3.85%, a two-year low, citing diminishing inflationary pressure and increased external risks. This decision, anticipated by financial markets, reflects the RBA’s strategic recalibration in light of a more fragile global economic environment—particularly the fallout from the United States' aggressive tariff regime.

The Australian dollar reacted by dropping 0.4% to USD 0.6430, while bond futures and interest rate swaps adjusted to price in further easing, implying as much as 57 basis points in cumulative rate reductions by year-end.

Inflation Returns to Target, But Labour Market Remains Tight

Inflation figures provided further support for the rate cut. Headline consumer price inflation was recorded at 2.4% for Q1 2025, while core inflation, represented by the trimmed mean measure, dropped to 2.9%. These are the first readings within the RBA’s 2%–3% target range since late 2021.

Despite these favorable trends, the RBA remains cautious, noting persistent structural challenges. A tight labor market—with unemployment holding steady at 4.1%—continues to exert upward pressure on wages. However, recent wage growth was largely driven by public sector adjustments, suggesting limited spillover into broader wage-price inflation.

Global Trade Instability a Key Consideration

The external environment has become more volatile since the RBA’s April meeting. U.S. President Donald Trump’s sweeping 10% tariffs on global imports have destabilized financial markets and triggered uncertainty across global supply chains. Although a temporary tariff truce with China has been reached, lasting only 90 days, the lingering threat of renewed escalation remains high.

Australia’s exposure to global trade, particularly through its commodity exports to China, places it in a vulnerable position. A slowdown in Chinese demand for resources such as iron ore could transmit a direct negative shock to Australia's export-driven growth model.

Domestic Economic Data Offers Mixed Signals

While inflation is cooling, other domestic indicators present a complex picture. Consumer spending has been weaker than anticipated, undermining hopes for a demand-led recovery. In contrast, employment remains resilient, and wage gains—although sector-specific—suggest there is still latent demand in the economy.

The RBA's updated quarterly Statement on Monetary Policy projects softer inflation and higher unemployment, even assuming further monetary easing. This cautious outlook reflects the expected downstream effects of trade disruptions and reduced global demand, reinforcing the bank’s emphasis on risk management over aggressive stimulus.

Forward Guidance: Easing Bias, But Not Complacency

According to Sean Langcake of Oxford Economics Australia, the current rate remains mildly restrictive. He anticipates at least two additional rate cuts in the second half of 2025, assuming no significant deterioration in the external environment. The RBA’s own language—"somewhat less restrictive"—signals an openness to further easing but with clear conditionality. Productivity remains weak, and any unexpected inflationary shock could stall the easing cycle.

Australia’s rate cut to 3.85% reflects a balance between domestic inflation moderation and growing global economic threats. While the RBA is easing policy to buffer against external shocks and support consumer demand, its cautious tone indicates that future moves will be contingent on evolving data. With global trade uncertainty and internal structural fragilities at play, the path ahead remains finely poised between stabilization and renewed volatility.

Source: Reuters

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Economic

Commodity

FOMC member Raphael W. Bostic’s upcoming speech may trigger a rise in XAUUSD quotes towards 3,290 USD.

XAUUSD forecast: key trading points

● FOMC member Raphael W. Bostic’s speech

● Current trend: moving upwards

● XAUUSD forecast for 20 May 2025: 3,290 and 3,195

Fundamental analysis

As of today, gold (XAUUSD) is trading around 3,215 USD per ounce, showing moderate losses as the US dollar strengthens. However, the downgrade of the US credit rating by Moody’s to Aa1 restrains further declines and supports safe-haven demand for gold.

On 20 May 2025, Federal Reserve Bank of Atlanta President and FOMC member Raphael Bostic will speak at the Financial Markets Conference. His speech is expected to provide key signals about future US monetary policy.

What to watch in Bostic’s remarks:

● Cautious stance on rate cuts: Bostic has previously said he expects only one rate cut in 2025, stressing the need for more time to assess the economic effects of new tariffs

● Inflation concerns: he expressed concern about persistent inflation, especially in the housing sector, noting that despite progress, the 2% inflation target has yet to be achieved

● Economic resilience: Bostic stated that the economy remains resilient, though less so than expected at the start of the year, highlighting considerable uncertainty in the current outlook

Near-term XAUUSD price forecasts suggest a possible correction towards 3,195 USD. However, in the long term, XAUUSD quotes are expected to rise to 3,900 USD by the end of the year.

XAUUSD technical analysis

On the H4 chart, XAUUSD prices have formed a Harami reversal pattern near the lower Bollinger Band. They are currently developing an upward wave based on that signal. Since XAUUSD quotes stay within the ascending channel, the bullish trend is expected to develop further. The immediate upside target could be the 3,290 USD resistance level.

At the same time, today’s XAUUSD technical analysis also considers an alternative scenario, with prices correcting towards 3,195 USD before the next upward move.

Once the correction completes, XAUUSD prices could aim for a new all-time high, targeting the 3,900 USD level.

Summary

The US credit rating downgrade, combined with technical analysis, supports a potential XAUUSD rise towards 3,290 USD following a correction.

Source: RoboForex

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Economic

Strategic Push for a Bilateral Breakthrough

India is intensifying its diplomatic and economic engagements with the United States in pursuit of a phased trade agreement, aiming to pre-emptively soften the impact of a new round of retaliatory tariffs expected from the Trump administration by July. This urgency highlights India’s desire to secure a framework that preserves its export competitiveness while gaining improved access to the American market.

The proposed structure of negotiations includes three distinct stages. The first phase—considered a temporary but critical breakthrough—focuses on market liberalization for industrial goods, select agricultural commodities, and the removal of key non-tariff barriers such as stringent quality standards. This short-term deal, though limited in scope, could serve as a stabilizing bridge to more comprehensive agreements later in the year.

Diplomatic Engagements and Tactical Coordination

Commerce Minister Piyush Goyal’s four-day visit to Washington underscores the weight India places on this initiative. His scheduled meetings with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick are aimed at accelerating progress, though official confirmation from either government remains elusive. The visit, occurring in parallel with active tariff threats, reflects the dual-track nature of pressure and partnership that currently defines Indo-U.S. trade relations.

Although Indian negotiators have embraced the phased approach, it is not yet clear whether the Trump administration is aligned with this format. Washington’s position remains ambiguous as talks continue behind closed doors.

Roadmap to a Comprehensive Pact

The second phase of the negotiations is designed to be broader and more institutional, potentially encompassing up to 19 sectors. This stage, according to Indian officials, may reach completion between September and November 2025, aligning with a planned visit by President Trump to India for the Quad Leaders Summit. The alignment of timelines suggests a deliberate effort by New Delhi to anchor economic diplomacy within wider strategic dialogues in the Indo-Pacific.

The final and most ambitious phase envisions a full-spectrum bilateral trade agreement. However, progress here is contingent upon approval from the U.S. Congress, introducing a layer of political uncertainty that could delay completion well into 2026.

Mutual Interests Amid Rising Tensions

India has been among the first nations to initiate bilateral trade discussions with the Trump administration following the latter’s assumption of office in February. The momentum from Prime Minister Narendra Modi’s early visit to the White House provided an initial boost, with both sides expressing shared ambitions for enhanced economic cooperation. At that time, both leaders articulated the goal of finalizing the first stage of the agreement before autumn.

However, recent developments signal a more contentious undercurrent. Last week, New Delhi threatened retaliatory tariffs on American imports—marking a shift toward a tougher negotiating posture. In parallel, President Trump claimed that India had offered to remove tariffs on U.S. products entirely, although he also noted that he was under no pressure to finalize a deal quickly. This disparity between negotiation timelines and political signaling from both sides adds complexity to the outlook.

India’s pursuit of a phased trade deal with the United States is driven by a pragmatic blend of geopolitical necessity and economic foresight. While short-term agreements may mitigate tariff shocks, the path to a comprehensive bilateral trade pact remains uncertain, shaped by internal politics in Washington and strategic recalibrations in New Delhi. The ability of both sides to navigate mutual expectations in the coming months will determine whether this initiative results in substantive gains or stalls under rising pressures.

Source: The Economic Times

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Forex

Domestic Market: USD Rises Slightly, CNY Stable

At 8:15 AM, Vietcombank and BIDV both listed the USD at 25,760 VND/USD (buy) and 26,120 VND/USD (sell), an increase of 20 VND in both directions compared to the morning of May 19.

The central exchange rate set by the State Bank of Vietnam decreased slightly by 2 VND to 24,968 VND/USD. With a ±5% trading band, the allowable ceiling rate is 26,216 VND/USD and the floor is 23,720 VND/USD. At the State Bank's Exchange, the reference rates remained at 23,772 VND/USD (buy) and 26,168 VND/USD (sell).

Meanwhile, the yuan held steady. Vietcombank quoted it at 3,539–3,653 VND/CNY, and BIDV at 3,557–3,654 VND/CNY, with no changes from the previous day.

On the free market, the USD traded at 26,344–26,444 VND/USD, rising 25 VND on the buying side and 5 VND on the selling side.

Global Market: USD Plunges as Risk Sentiment Shifts

The U.S. Dollar Index (DXY) dropped by 0.71% to 100.38, hitting its lowest level in more than a week. The dollar weakened across the board due to growing global trade tensions and a flight to safe-haven assets following the U.S. credit rating downgrade and trade war escalation.

Against key currencies:

The USD fell 0.5% to 144.98 yen, with an intraday low of 144.665 — its weakest level since May 8.

It dropped to 0.8317 Swiss franc, also a one-week low.

The euro strengthened 0.6% to 1.1232 USD, while the British pound rose to 1.3355 USD, its highest since late April, buoyed by renewed UK–EU relations.

Analyst Commentary: Short-Term USD Pressure Expected

Experts believe the recent dollar weakness reflects growing risk aversion in financial markets and concerns over long-term U.S. fiscal sustainability. The downgrade by Moody’s and rising geopolitical risks are pushing investors toward currencies perceived as safer, such as the yen, franc, and euro.

While the USD had enjoyed a prolonged rally, this correction indicates market skepticism about Washington’s trade policies and budget management under President Trump, especially as talks with major trading partners remain uncertain.

Domestically, the USD shows slight strength, but internationally, investors are increasingly turning away from dollar assets in favor of safer alternatives amid a complex mix of fiscal, political, and trade-related headwinds. As markets watch for further developments in U.S.–China negotiations and Fed policy signals, exchange rate volatility is likely to persist.

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Economic

Germany’s Fiscal Strain and Political Backdrop

Germany's budget process for 2025 is unfolding under unusual political and economic pressures. Following the collapse of the previous "traffic light" coalition in November 2024 due to irreconcilable differences over fiscal policy, the new grand coalition between the Social Democratic Party (SPD) and the Christian Democratic bloc (CDU/CSU) has inherited a complex fiscal landscape. Since the Bundestag has yet to pass a formal budget for the current year, the federal government is operating under a temporary budget that allows only essential expenditures.

Finance Minister Lars Klingbeil, also the SPD leader, is pushing for budget cuts and expenditure control, emphasizing that the existence of a special €500 billion fund should not justify complacency. "We cannot sit back just because we have a special fund for infrastructure and defense outside the debt brake," Klingbeil told dpa.

The Role of the €500 Billion Special Fund

Established through an amendment to Germany’s Basic Law (constitution), the special fund is designed to modernize critical infrastructure and boost defense spending in response to security and geopolitical pressures, including the war in Ukraine. The fund is exempt from the national debt brake, which constitutionally limits new borrowing. However, Klingbeil stressed that this fund is meant for future-oriented investment, not as a stopgap for structural budget shortfalls.

The draft federal budget for 2025 is scheduled for cabinet approval on June 25. This will be followed by a first reading in the Bundestag before the summer recess, with final parliamentary approval expected by September. Planning for the 2026 budget will also begin soon and is anticipated to conclude by the end of this year.

Klingbeil faces the difficult task of reconciling investment ambitions with constitutional debt limits and declining tax revenue projections. The most recent fiscal estimates suggest a shortfall of €33.3 billion by 2029 compared to projections made in October 2024, further fueling concerns about the sustainability of public finances.

As Germany attempts to navigate post-coalition instability and long-term structural deficits, Klingbeil’s call for austerity—even with a substantial special fund—signals a cautious approach to governance. The emphasis on not using the fund to patch budget holes underlines a broader commitment to fiscal prudence while maintaining Germany’s economic and defense commitments. The months ahead will test the coalition’s ability to strike a balance between fiscal restraint and investment in national resilience.

Source: Reuters

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